The best-performing stocks typically have robust sales growth, increasing margins, and rising returns on capital, and those that can maintain this trifecta year in and year out often become the legends of the investing world.
It’s clear there’s a strong connection between sustained earnings growth and hall-of-fame returns. Taking that into account, here are three market-beating stocks that deserve a spot on your list.
Carvana (CVNA)
Five-Year Return: +291%
Known for its glass tower car vending machines, Carvana (NYSE: CVNA) provides a convenient automotive shopping experience by offering an online platform for buying and selling used cars.
Why Could CVNA Be a Winner?
- Brand halo makes it a customer acquisition machine that onboards new users at scale without spending much money
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 46.4% over the last three years outstripped its revenue performance
- Free cash flow margin jumped by 30.6 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $200 per share, Carvana trades at 14.8x forward EV-to-EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Yum! Brands (YUM)
Five-Year Return: +126%
Spun off as an independent company from PepsiCo, Yum! Brands (NYSE: YUM) is a multinational corporation that owns KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill.
Why Do We Like YUM?
- Offensive push to build new restaurants and attack its untapped market opportunities is backed by its same-store sales growth
- Disciplined cost controls and effective management resulted in a strong two-year operating margin of 32.3%
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
Yum! Brands is trading at $157.13 per share, or 26.3x forward price-to-earnings. Is now a good time to buy? See for yourself in our full research report, it’s free.
RBC Bearings (RBC)
Five-Year Return: +233%
With a Guinness World Record for engineering the largest spherical plain bearing, RBC Bearings (NYSE: RBC) is a manufacturer of bearings and related components for the aerospace & defense, industrial, and transportation industries.
Why Does RBC Catch Our Eye?
- Annual revenue growth of 17.4% over the past five years was outstanding, reflecting market share gains this cycle
- Excellent operating margin of 19.8% highlights the efficiency of its business model, and its profits increased over the last five years as it scaled
- Earnings growth has massively outpaced its peers over the last two years as its EPS has compounded at 22.5% annually
RBC Bearings’s stock price of $333 implies a valuation ratio of 31.5x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.
